How do you decide between a high deductible and a low copay plan?

Deciding between a high deductible and a low copay plan involves assessing individual healthcare needs and financial considerations. A high deductible plan typically offers lower monthly premiums but requires higher out-of-pocket expenses before insurance coverage kicks in. This option may suit individuals who are generally healthy and anticipate minimal medical expenses. Conversely, a low copay plan generally involves higher monthly premiums but offers lower out-of-pocket costs for each medical service utilized. It may be preferable for those with frequent medical needs or chronic conditions. Consider factors such as expected healthcare usage, financial stability, and risk tolerance when selecting the most suitable plan.

These are both types of cost-sharing mechanisms in health insurance plans. A deductible is the amount you pay for health care services before your health insurance begins to pay. A copay (or copayment) is a fixed amount you pay for a covered health care service, usually when you receive the service.

It's also important to also understand how deductibles and copays interact. Copay amounts do not aggregate towards your deductible. Services that are available for a copay can be thought of as deductible waived. But, because that's waived, your copay does not count towards the deductible target. You may be accessing copay services frequently all year and not have even touched your deductible. This is super important to factor in to your analysis if you are expecting a pregnancy and childbirth when costs are high all around. You may be better served by what looks like a higher deductible, but in fact would be lower than your combined copay and then deductible responsibilities.

Depending on the size of your company you may only have standard choices provide by the insurance companies. Each year at renewal, you typically get an increase of 5%-15% and changing deductibles and co-pays is only cost shifting from the left pocket to the right pocket between the employees and the employer. Companies over 50-100 employees can take advantage of Self-Funded health plans. With fully insured plans, you write 12 checks a year and all costs are covered. With self-insured plans you write the same 12 checks, but have an opportunity to recoup some of that back during the good years. Yes, there is risk involved, however, there are guardrails with max funding the first 5 years, stop-loss insurance, ect.

Typically, plans with higher deductibles have lower monthly premiums because you pay more out of pocket when you need care. Conversely, plans with lower deductibles and lower copays tend to have higher premiums, as the insurer covers more of the costs.

This needs to be considered both as an employer when picking plans, as well as employees during open enrollment. Are you actually looking at member experience? What is exptecrec for the year? It all needs to be considered. Cheaper premiums may equal more out of pocket if not factored correctly.

When comparing high deductible and low copay plans, consider your health care needs. High deductible plans may be better if you rarely need medical services, while low copay plans can be beneficial if you frequently visit doctors or need regular medications.

If you have chronic conditions or expect significant medical expenses, a plan with lower deductibles and copays might be more cost-effective.

Contributing to a FSA or HSA can be beneficial to those that are managing care for chronic illness or some elective procedures/therapies. The contributor should educate themselves on the differences, rules and regulations of these plans. The most important rule being a FSA requires the contributor to use all funds by the end of the year (or lose them), while HSA funds roll over from year to year. These accounts offer some tax benefits so there are yearly contribution limits along with healthcare cost limits.

It’s important to have every detail possible as an employee. Meet with HR. Determine the choices that are presented to you. If with large employer - ask pertinent questions and decide what’s most important to you and your family. And understanding the how this can work is pivotal. Just because your ID card doesn’t have a “big box” brand you have heard of - perhaps going with a smaller TPA was how your employer assured you coverage in your local hospital network. It’s all about asking the right questions and getting answers!

Look into the plan's network of doctors and hospitals, coverage for medications, and any additional benefits like preventive care, which can all influence your decision. Also, more and more employers have begun contributing to employees' Health Savings Accounts (HSA) if they enroll in high-deductible plans. You'll need to factor in their contribution when determining which plan is most cost-effective for you.

While deductible and copay amounts are important , don't forget the most important number which is annual out of pocket (OOP) maximums. The annual OOP max is the most you could possibly be responsible for in one year, and your deductible and copay costs are included. Keep in mind, there are separate OOP max amounts for individuals and for families, so if you have multiple dependents with high medical needs, you can expect to pay the higher amount. For those not facing any ongoing medical conditions, it is important to remember that injuries can quickly add up costs. OOP max is the number to weigh against your personal risk comfort level- meaning like lower deductible and copays, you can expect higher premiums with a lower OOP max.